Equity release is a high profile and evolving market which is entering a crucial stage in its development, according to the latest Defaqto report (reports Financial Adviser, 23/4/07).
But the report warned that equity release is still tarnished with the bad publicity that came from products available in the late 1980s.
Defaqto has identified key criticisms of the market and the way forward for advisers and providers.
David Black, head of the banking research team at Defaqto, said the combination of under-funded pensions, low annuity rates, demographics and overhanging pensioner debt plus the levels of equity built up in housing stock should mean more pensioners take out the product.
However, the report states there ‘remains the possibility in future years that equity release will become a compulsion rather than an option as the Government tussles with the income requirements of the projected rapid expansion in the elderly population.’
Mr Black added: “The reality is that such a politically unpopular approach would not be too far removed from the current deferred payment scheme operated by local authorities to help homeowners fund their long term care costs.”
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